Economic growth and economic development 32

Introduction to Modern Economic Growth level Figure 1.12 shows that as we go further back, the gap among countries becomes much smaller This further emphasizes that the big divergence among countries has taken place over the past 200 years or so Another noteworthy feature that becomes apparent from this figure is the remarkable nature of world economic growth Much evidence suggests that there was little economic growth before the 18th century and certainly almost none before the 15th century Maddison’s estimates show a slow but steady increase in West European GDP per capita between 1000 and 1800 This view is not shared by all historians and economic historians, many of whom estimate that there was little increase in income per capita before 1500 or even before 1800 For our purposes however, this is not central What is important is that starting in the 19th, or perhaps in the late 18th century, the process of rapid economic growth takes off in Western Europe and among the Western Offshoots, while many other parts of the world not experience the same sustained economic growth We owe our high levels of income today to this process of sustained economic growth, and Figure 1.12 shows that it is also this process of economic growth that has caused the divergence among nations Figure 1.13 shows the evolution of income per capita for United States, Britain, Spain, Brazil, China, India and Ghana This figure confirms the patterns shown in Figure 1.11 for averages, with the United States Britain and Spain growing much faster than India and Ghana throughout, and also much faster than Brazil and China except during the growth spurts experienced by these two countries Overall, on the basis of the available information we can conclude that the origins of the current cross-country differences in economic performance in income per capita formed during the 19th century and early 20th century (perhaps during the late 18th century) This divergence took place at the same time as a number of countries in the world started the process of modern and sustained economic growth Therefore understanding modern economic growth is not only interesting and important in its own right, but it also holds the key to understanding the causes of cross-country differences in income per capita today 18